Policies give directions on where a country should go - and how. Fiscal and other policies guiding a country like Tanzania are very important for the health of the
economy. Among other things, fiscal policy attempts to influence behaviour of agents in the market. Depending on what is to be achieved, the policy and its instruments may stimulate or contract the economy. Expansionary fiscal policy measures will include low tax rates and few tax types as well as many and high subsidies. The opposite is true for contractionary fiscal policy instruments. Public engagement is very important for best possible outcomes of any policy including fiscal policy as partly outlined in this piece.Fiscal policy
Fiscal policy is the means by which governments such as that of Tanzania, adjust spending levels and tax rates to monitor and influence nations’ economies. This is done using various fiscal policy instruments such as taxes and subsidies. Taxes and other sources of revenues aim at raising revenues to finance public goods and services such as economic and social infrastructure. Subsidies are used by governments to shoulder and pay for final consumers burden.
Public engagement
Public engagement in the context of this piece implies a participatory approach in which key and representative sample of tax stakeholders contribute in shaping fiscal policy. The stakeholders are those who are positively or negatively affected by the policy in a direct or indirect way. The engagement involves stakeholders giving their inputs on the kind of policy they want. Each stakeholders group would like a policy that favours it. Naturally captains and titans of the industry as well as consumers would like expansionary fiscal policy. Revenue collectors would most likely want the fiscal policy that leads to high revenues from many tax types and high tax rates. These opposing targets need to be reconciled. This can be partly done through proper and careful public engagement that ends up with win-win situation for all involved parties.
Public dialogue on tax
Studies show that tax reforms are not the exclusive domain of elites. Neither is it the exclusive domain of hired external experts and governments. In Tanzania there are increasing interest groups that demand to shape the tax agenda and correctly so in the name of ownership and success of the expected outcomes. In the case of Tanzania for example, diverse business associations across sectors of the economy, including multinational companies as well as many other lobbying groups, are coming together in alliance to argue for their cases. The cases include but are not limited to getting better fiscal regimes that will ensure their success.
Tax issues of concern
Corporate chiefs who are captains and titans of the industry in Tanzania have a long litany of tax issues they have wanted to communicate to the authorities in their bid to shape the country’s tax reforms. The issues include tax exemptions and high occurrence of tax exemptions that reduce the tax base thereby shifting the burden to few tax payers. Other issues revolve around many types of taxes and associated high rates, tax refunds, tax assessment, easy of paying taxes, use of some specific types of taxes such as Skills Development Levy and general inadequacy lack of predictability in key fiscal issues. All these are constraints on the part of tax payers. They call for public engagement to be amicably solved.
The role of lobbying
Individual businesses and their associations do lobby for their specific sectoral and industry interests in the fiscal policy space. This can be done through sectoral and industry associations that are the voices of their members. In addition, public sector including specific ministries can mobilize appropriate stakeholders against potential or actual negative aspects of fiscal policy in general or a particular instrument of the same. Lobbyists may or may not succeed in attaining their goals.
Ways forward
Policy recommendations in the context of public engagement in fiscal matters include having a very participatory fiscal reform process. A consultative approach to fiscal reforms may ensure more acceptance and success in reforms in question. Substantial effort should be invested in the design of a consultative fiscal reform process. Policy makers and revenue officials should view broad-based and high quality public engagement with all key stakeholders as an important mechanism towards a good fiscal policy and its various instruments such as taxes and subsidies.
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